Dems Had Better Listen to the Public's Anger Over Our Failed Trade Policy

Editor's note: An abbreviated version of this article appeared on TomPaine.com.

After long, frustrating years of republican-lite economics, many Democrats have finally found the ability -- and the language -- to connect with average Americans. They talk of "two Americas," of the economic pain -- the "squeeze" -- felt by the middle class and of inequality that's reached heights not seen since the era of the robber-barons.

One of the most potent issues in the 2006 elections was trade. Candidates across the United States won races by standing in opposition to more trade deals based on the NAFTA-WTO model and in favor of fair trade policies that can uplift the middle class and safeguard the environment. But despite the fact that the world is moving away from the kind of corporate-written trade deals that has marked the Clinton-Bush era, there remains a group within the Democratic establishment that appears to be unmoved both by public opinion against our current trade policy and hard data that reveal its failure.

A recent intervention from the Democrat-aligned Center for American Progress provides a case in point. In a recent CAP publication, Daniel K. Tarullo, a Clinton administration official who had previously advised the Mexican government on NAFTA, tried to make "The Case for Reviving the Doha Trade Round" of the WTO. In the past, CAP produced top-notch work on a wide range of domestic economic policies, as well as reports critical of CAFTA and the U.S. trade deficit. But the group seems out of step with the majority of the Democratic base and with progressive thinking worldwide on the WTO, with a 2005 report even calling WTO escalation "critical to our future prosperity and security."

Tarullo makes four main arguments for WTO escalation. First, he argues that the Doha Round represents a "back-to-basics trade agenda" that is focusing on "reducing tariffs and trade-distorting subsidies" (mostly in agriculture) instead of on "undermin[ing] legitimate regulatory prerogatives in service sector and investment policy." Tarullo is more keenly aware than many of the implications of "trade" pacts dipping too deeply into the domestic policy sphere. The attacks on domestic environmental, food safety, drug-pricing and other regulatory policies caused by the enormous overreach of the WTO and pacts such as NAFTA have given "trade" a bad name.

Yet a review of the actual agenda now under negotiation in the Doha Round WTO talks belies Tarullo's back-to-basics claim. For instance, the service sector negotiations include proposals to deepen WTO jurisdiction over U.S. immigration policy. Demands from India and other countries in the Doha Round go even further, calling for a global guest worker program that is opposed by both immigrant advocates and critics alike. And developing country opposition to WTO escalation goes far beyond agricultural tariffs and subsidies. In fact, development groups like Oxfam have termed the Doha Round's proposals for manufacturing a threat to "developing countries' right to a future."

Tarullo also argues that Doha offers a political "opportunity to begin bridging the partisan divide over trade that grew wider in the past decade." But what Tarullo labels a "partisan" divide is rather an increasing class divide that is a direct result of those failed trade policies. As has been noted by the pro-WTO Peterson Institute, Paul Krugman and other prominent economists, trade policy could easily account for 30 percent or more of the increase in income inequality in recent decades (PDF). To build a greater consensus on trade policy, the Bush administration should develop a trade policy that benefits the majority, rather than stay the course on a policy that's benefited only a few special interests.